Vietnam's steel industry could affect global markets as production rises

Vietnam's growing steel industry could impact global steel trading patterns in 2019 in light of its strong performance in overseas markets and production growth.

Despite the United States' imposed section 232 tariffs, Vietnam was able to increase its exports to the United States in 2018, while other Asian steel mills recorded declines.

Citing US data, imports of finished steel from Vietnam were 1.11 million tonnes in 2018, up 48% from 2017.

Vietnamese finished steel products accounted for about 4.3% of the total 25.69 million tonnes imported by the United States in 2018.

This growth was driven by Formosa Ha Tinh Steel Corp., which launched its second blast furnace on May 18, 2018 and doubled its crude steel production capacity to 7 million tonnes per year. FHS is 70% owned by Formosa Plastics, 25% by China Steel Corp. and 5% - Japanese JFE Steel.

Although US imports of finished steel products declined 13.1% year-on-year to 25.69 million tonnes in 2018 from 29.56 million tonnes in 2017, Vietnam's import share rose from 2 , 5% recorded in 2017, which amounted to about 749,000 tons.

In 2018, Vietnam exported 6.26 million tons of metal products, which is 33% more than 4.71 million tons in 2017. In contrast, the country's imports amounted to 13.5 million tons, which is about 10% less than 15.0 million tons a year earlier.

Opposing import and export trends were driven by an increase in domestic finished steel production to 24.19 million tonnes in 2018, up 14.9% from 2017, according to data from the Vietnam Steel Association.

According to VSA data, production of hot-rolled steel from finished steel products increased to 3.44 million tonnes, which is about 2.5 times more than 1.38 million tonnes in 2017.

Industry sources predict Hoa Phat Group, the largest steel producer in Vietnam, will gain access to flat steel in the first quarter of 2019. The steelmaker plans to complete construction of his Dung Quat plant and gradually start up all four blast furnaces by the end of 2019. The design capacity of the steel plant will be about 4 million tons per year, half of which will be used for hot rolled coil production.

“When looking at global steel production trends, it is useful to monitor growth in countries that are traditionally not large producers but could affect the global steel trade balance,” Citi Research said in a March 7 report on the Vietnamese metals industry.